Golden Boy and Schaefer heading to arbitration

June 26, 2014

ESPN reports that Golden Boy Promotions has requested arbitration against former CEO Richard Schaefer.  According to the report, De la Hoya and Golden Boy are requesting $50 million in damages from Schaefer although no allegations have been reported as to the claim.

The case is being sent to private arbitration per the terms of Schaefer’s employment agreement with Golden Boy.  It likely had a clause that if there was a disagreement, in lieu of filing a lawsuit, the parties would agree to go to arbitration which is theoretically faster and less expensive.  Thus, no lawsuit and it is unlikely that the general public will not know much of the evidence and testimony unless it is leaked.

Payout Perspective:

While we may not know the claims against Schaefer, the speculation that Schaefer and Al Haymon may go into business together may be one of the claims Golden Boy is making.  Golden Boy might claim that Schaefer breached his fiduciary duty as CEO by not acting in the company’s best interests.  The recent Main Events lawsuit filed against Al Haymon paints the picture that Schaefer and Haymon have worked together (more on this lawsuit in the coming days).  The legal action is not surprising considering the public departure of Schaefer and other staff as well as Floyd Mayweather.

Court sets schedule for Summary Judgment Motions in New York

June 22, 2014

With the New York Assembly not voting on a bill to legalize pro MMA in the state, the focus turns to Zuffa’s lawsuit against the state.  A court order issued late last week will allow the parties to file Motions for Summary Judgment by July 3rd.

The remaining cause of action left from Zuffa’s lawsuit filed back in November 2011 is the claim that the present law banning MMA in the state is unconstitutionally vague.  The Court dismissed the previous claims upon New York’s Motion to Dismiss.

The parties have until July 3rd to file a motion which would dismiss the final claim and end the lawsuit if filed by New York.  Zuffa has the option of filing its own motion which may leave an opening for a possible settlement.

Responses to the initial Summary Judgment Motions are due on July 17th with Replies to those Response Motions by July 31st.

H/t:  Jim Genia

Payout Perspective:

Spoiler Alert.  There will be a Motion for Summary Judgment.  The end to this lawsuit could be near.  Or, we could be hunkering down for more briefing.  Discovery has closed for all intents and purposes and if the Court is not persuaded to dismiss the lawsuit on New York’s Summary Judgment motion, we will be getting ready for a trial.

If you were wondering how long after the Court receives the papers will the Judge make a decision.  The lawyerly answer to that is: it depends.  But if you want some guidance.  New York filed its Motion to Dismiss in October 2012, a hearing did not take place until February 2013 and the ruling was not issued until late September 2013.  Thus, we could wait almost a year for a ruling.  Hopefully, it may happen sooner.  But, we may be through another legislative session in New York before a ruling.

MMA Payout will keep you posted.

Condit tattoo missing from UFC video game

June 20, 2014

Earlier this week, EA Sports released the latest UFC video game which includes many of your favorite UFC fighters including Carlos Condit.  However, gamers may notice that Condit will not have the lion tattoo that is on the side of his body for legal reasons.

As  the Wall Street Journal reports, the tattoo was removed from the video game as a precaution from infringing on any copyright issue that Condit’s tattoo artist may have with its use.  Previously, Condit’s tattoo artist sued defunct video game maker THQ for the unauthorized use of the tattoo in UFC Undisputed.  Long story short, Escobedo asked for millions, the Bankruptcy Court quantified the use to the sum of $22,500 (the amount Condit was paid for the use of his likeness).

Condit tattoo

The move to digitally airbrush Condit of his tattoo underscores a big issue the National Football League Players’ Association (and likely other leagues) is facing when it comes to player tattoos and digital rights.  One of the ways to protect itself from lawsuits is to have players get their tattoo artists sign releases.

Payout Perspective:

Authenticity is something that sports video games have and the inclusion of fighters’ facial features, hair style, mannerisms and even their tattoos are important. College football games have come under fire for similar issues and we may see the elimination of any identifiable feature your favorite college player may have in a game.   But that issue is a little different from the one here.  However, it is clear that If you are Carlos Condit, you might be concerned with the fact that your likeness is not exact, which may impact your overall future brand. That argument is a little far-fetched but the issue of re-imaging personas due to concerns about being sued is a slippery slope we may see in future video games.

Vote on MMA looking unlikely in NY

June 9, 2014

With a week left in the 2014 legislative session in New York, it appears that Dana White’s comments a couple weeks ago were prophetic.  A vote legalizing MMA in the state will not happen in the State Assembly this year.

UFC Vice President of Regulatory Affairs Marc Ratner confirmed to MMA Junkie Radio he doesn’t expect a vote this year.    “…I would say it will not make it to the floor again (this year),” Ratner said of the bill which will be bypassed yet again after passage through the state senate.

Ratner indicated that he was “cautiously optimistic” about the possibility of a bill but also stated that, “I feel like the handwriting is in big block letters on the wall and we’re not going to get it done this year.”

Ratner went on to express the frustration of the ordeal which we may assume is felt by White and many other MMA supporters in New York.

Via MMA Junkie:

“I’ve been to (New York state capital) Albany 20 times throughout the past five years, and it’s just wrong. One of my biggest analogies would be, give us a turn at bat, and if we strike out, then it’s on us. But to never, never get a chance and have the leadership of the Democratic assembly look around the room and say, ‘Not enough interest this year, let’s talk about medical marijuana,’ that’s all we get. It never comes to a vote.”

Payout Perspective:

Ratner indicated that they would need 76 of the 101 Democratic assembly members to have the MMA bill pass.  Ratner says they have 60 sponsors and would need 16 more votes for passage.  While the UFC appears to be softening the blow for what will be another empty legislative session, one has to wonder what else the UFC could do to facilitate a vote.

UFC policy now requests background checks for fighters

May 29, 2014

MMA Junkie reports on the UFC’s new policy of requesting its contracted fighters to sign a release of their personal information for background checks including details related to their medical, educational and criminal history.

As pointed out by Stephen Marocco’s piece, the request includes a waiver of “doctor/patient confidentiality” which circumvents HIPAA (Health Insurance Portability and Accountability Act) privacy laws.  Essentially, Zuffa could discuss a fighter’s health history with a fighter’s medical provider.

According to the article, the information has been collected for several years but the new document encompasses all of the releases in one form.

Payout Perspective:

There are obvious needs for the releases from the fighters.  The UFC does not want to be surprised by any unknown criminal issues or associations such as Will Chope or Benjamin Brinsa.  The health information is important because the UFC probably does not want to discover a pre-existing health condition which might preclude the fighter from fighting.

The Junkie article also talked to Sports Law professor Warren Zola about whether the release of information is standard for independent contractors.   Zola indicated that while the request is “more than many employers would ask,” it was not illegal.  Zola goes on to indicate that Zuffa’s leverage allows it to request the information and most fighters wanting to fight for the company must abide by its rules otherwise there’s the possibility that they may not work for the company.  Only top-notch talent would have some bargaining power over these consents.

Overall, the request for information is a way that the UFC is trying to protect its brand.  As it continues to grow and expand internationally, these new consents are a way to ensure that all of its bases are covered with its fighters so that it does not get blindsided with possible PR issues in the future.

If you read the article, you will find that Professor Zola uses the “M” word (he actually says “They have close to a monopoly…”) when talking about the UFC and its leverage to obtain these consents from its contracted workers.

Zuffa sues NY man for alleged pirating of 141 UFC PPVs

May 1, 2014

The New York Post first reported that a New York man is being sued by Zuffa for alleged copyright infringement for pirating, uploading and distributing 141 UFC PPVs.

In a lawsuit filed on Tuesday in the United States District Court for the Eastern District of New York, Zuffa is suing Steven Messina and assorted unnamed individuals for copyright infringement among other causes of action as it relates to pirating UFC PPVs and uploading them to a web site for viewing.  Zuffa alleges that the defendants received a financial benefit as a result of uploading the pirate PPVs.

Zuffa is asking for statutory penalties of $150,000 for each separate act of copyright infringement, up to $110,000 for each of the defendants’ use of UFC content, up to 60,000 for intercepting UFC content, attorney fees and unspecified punitive damages.

Adding up all the penalties, Zuffa would request $32 million plus attorney fees and punitive damages from the New York resident which the New York Post reports lives with his parents.

The lawsuit can be seen here (via MMA Junkie).

Payout Perspective:

First thing is first.  Forget about anyone getting $32 million.  Even if the defendant did not show up and a judgment was entered in against him, Zuffa would still have to find this guy’s assets to collect.  The fact he lives in the basement of his parents’ house should tell you it is not going to get it.  So, it’s merely a number to intimidate.  As for the story that the guy lives with his parents, it’s sad and not relevant to his alleged wrongdoing.

Does this make people hate Zuffa because it is suing someone allegedly stealing its PPVs?  It should not but sentiment seems to be that this is a bad move for the UFC. Do some UFC fans want the option of stealing the occasional PPV when they don’t want to pay the $55 and suing these guys eliminates the option?  Zuffa is protecting its copyright and while it may be overreaching in some cases, the accused perpetrator did more than just stream a PPV illegally.

MMA Payout will keep you posted.

Boxer Mikey Garcia sues Top Rank

April 29, 2014

Boxer Mikey Garcia has sued Top Rank Boxing for violations of the terms of its promotional agreement under the Muhammad Ali Boxing Reform Act and laws in the state of California.  Garcia’s lawyers characterize the promotional agreement as making the boxer an “indentured servant.”

The lawsuit was filed earlier this month in Riverside County Superior Court in Riverside, California.

According to the lawsuit, “Garcia will demonstrate that Top Rank’s Promotional Rights Agreement violates numerous provisions of both California law and California’s strong public policy to protect California-based boxers from unscrupulous promoters and managers and from entering into improvident arrangement and is therefore unenforceable.”  As for the violations of the Ali Act, Garcia’s attorneys state that Top Rank did not provide the required disclosures under the act which requires that Top Rank let Garcia know the amount of money it would make from each of Garcia’s bouts.

Garcia is a Super Featherweight out of Riverside, California.  He is currently the World Boxing Organization’s champion.  He signed a Promotional Rights Agreement before Top Rank represented him which Garcia’s lawyers contends it grants Top Rank the ability to extend the agreement indefinitely.

The promotional contract was entered on April 13, 2006 which gave Top Rank the exclusive right to promote Garcia’s services as a boxer.  The terms of the Contract, which ran for 5 years, gave Top Rank the right to renew the terms of the agreement.

Garcia’s lawyers argue that Top Rank acted as Garcia’s manager which would be a violation of California law since it did not fill out the requisite forms to manage a boxer in California.  This was similar to the problems faced in the Ronda Rousey-Fight Tribe arbitration.

The Complaint also alleges that Top Rank did not disclose the payments it received from Garcia’s fights which would be a violation of the Muhammad Ali Act. Specifically sec 6307e(b)(1)-(3).

Lawyers for Top Rank have downplayed the lawsuit calling it “baseless” and we will likely see them seek a dismissal of Garcia’s claims.

Payout Perspective:

The promotional contract indicates that the jurisdiction is Nevada which may cause some procedural backlash by Top Rank.  In addition, Garcia is suing based on the Ali Act, a federal law, which may cause another procedural issue related to removing the case to federal court.

It’s interesting to note that on HBO’s The Fight Game, the belief was that no one close to Garcia knew he was unhappy and that he was going to file the lawsuit.  The inference is that there were no issues between Garcia and Top Rank.

I have not seen a fighter prevail in a case under the Muhammad Ali Act.  While Garcia may have a valid claim, it’s likely that the lawsuit will precipitate a settlement with Top Rank or to sever ties with it.

MMA Payout will keep you posted.

Wrestlemania XXX Perspective

April 10, 2014

Welcome to a special look at Wrestlemania XXX which took place at the Superdome in New Orleans, Louisiana.

Ultimate Warrior passes away

Perhaps the news of the death of Jim Hellwig (aka The Ultimate Warrior) has overshadowed the post-Wrestlemania news.  Hellwig was inducted into the WWE Hall of Fame, made an appearance at Wrestlemania, signed a deal to be an “ambassador” for the WWE and appeared on television on the company’s signature show, Monday Night Raw.  News broke late Tuesday night that he passed away in Arizona.

The Ultimate Warrior’s passing was picked up by mainstream news outlets as well as the UFC which sent out its condolences.  UFC fighters also chimed in to offer their sympathies.

Similar to the passing of Randy Savage, the outpouring of condolences for the death of The Ultimate Warrior likely brought back fond memories of a person’s childhood for many that grew up watching him.

Attendance and gate

According to a WWE press release, it was a sellout with a gate of $10.9 million with 75,167 in attendance.  Sunday’s event landed 5th in all-time Wrestlemania attendance.

For those in attendance, it may have been easier for fans to obtain unauthorized WWE merchandise as a Louisiana District Court denied the WWE’s motion to stop and confiscate bootleg merchandise from being sold in the area.  An order like this is usually allowed as a way to protect the intellectual property of the company.  However, the court decided it could not legally give the WWE this broad authority without identifying these potential infringers more specifically.

Don’t bet on pro wrestling

While we won’t necessarily get into the storylines from the night, it should be noted that The Undertaker’s win streak of 21 consecutive wins at Wrestlemania was broken by former UFC Heavyweight champion Brock Lesnar.  While this was scripted, a gambling web site lost money on the fight as it expected that the WWE would not let the Undertaker lose.  Fox Sports reported that the odds ranged from 14 to 1 and 8 to 1 for Lesnar to prevail.  The maximum bet was $100 although some people were allowed to bet “as much as $500 on Lesnar.”

UFC hypes Lesnar

Not only was Brock Lesnar a part of Wrestlemania, but the UFC took advantage of the hype of the event by having the Rock (below), Jim Ross and Steve Austin talk about the former UFC Heavyweight champion.   All of the videos were “Fight Pass Exclusives.”

Post by UFC.

WWE stock takes a hit

The day after Wrestlemania, the WWE announced its subscribers for the network.  To the dismay of investors, it announced it had slightly over 667,000 subscribers which were below Wall Street expectations.  While the WWE believes it will hit 1 million by the end of the year (the break-even point for the network), the stock fell almost 20% on Monday.  At the end of trading Thursday, it is down to $21.12.

The WWE received a lot of mainstream hype for the 30th edition of the biggest professional wrestling event of the year.  Most of this was focused on the new network and how it would fare airing such a heavily watched event.  To its credit, the video stream had no noticeable hiccups which were a good sign for the future of the product.  The question will be whether the negotiations for its rights deal will be affected in any way.

Payout Take:  Although the stock is taking a drop, the broader takeaway from the event was that it did not suffer any tech issues which was a major concern considering the amount of problems it had when it first launched in late February.  At least this shows that the product holds up.  The next big test for the company is a rights fee deal which is anticipated to occur sometime late April/early May.

Harvey responds to Rousey ruling

April 5, 2014

Darin Harvey issued a statement on the California State Athletic Commission (CSAC) ruling which released his former client, Ronda Rousey from her fight contract.   MMA Payout has obtained the decision siding in favor of the UFC women’s bantamweight champion and we take a look at what went wrong.

Via Inside MMA on AXS TV:

“When I first met Ronda Rousey four years ago, she was destitute and UFC President Dana White was quoted as saying a woman would never fight in the UFC. I set out to make Ronda a star and prove Dana wrong. The results speak for themselves. Ronda is now a highly sought-after model, spokesperson and actress, not to mention the first and still reigning female UFC champion. She deserves all the credit in the world for her accomplishments, but she never would have achieved such unprecedented success without the unwavering financial investment, career guidance and professional support Fight Tribe Management and I provided her.

I am not a litigious person, but I never thought for a moment that once she made it to the top, Ronda would turn her back on us and refuse to honor her legal and moral obligations. After months of radio silence and without even giving me the courtesy of an explanation I was forced to go to court to compel Ronda to private arbitration per the terms of our agreement. Before that could be sorted out, Ronda’s legal team ran to the State Athletic Commission, demanded an expedited hearing and tried to get our entire agreement thrown out on a technicality. During our four-hour hearing last week, I finally heard Ronda’s side of the story. Frankly, it’s pathetic and I’m not surprised the Commission chose not to include any of that in their written decision. The Commission did properly reject Ronda’s attempt to invalidate the entirety of our agreement, and I am very pleased with that aspect of their decision. Our case against Ronda will now proceed. I am confident that when all the facts are presented to an impartial private arbitrator, Fight Tribe Management’s contributions to Ronda’s career will be fully recognized and fairly rewarded.”

Harvey also tweeted the following:

 

Roy Englebrecht, a fight promoter in California, empathized with Harvey’s plight but also advised the following:

I have seen this happen a number of times over the years, where well intentioned people want to get involved in the fight business, but never take the time to learn about the business and some of the rules that govern it. This situation with Rhonda and Darin could have been avoided if Darin knew the CSAC rules and followed them. This manager/fighter agreement or promoter/fighter agreement in California is unique to the sport, and if not followed you will lose, as this ruling showed.

The comments are based on the ruling issued by Andy Foster of the CSAC in which it determined that the evidence and testimony at the March 28th Arbitration showed that the “Service Agreement” (as identified in the CSAC Arbitration Decision) was void as to the professional fighting services only.

The ruling, in favor of Rousey, is premised on Harvey not properly executing the fight contract on “printed forms approved by the commission.”  The Commission ruled that, “[t]he controlling contract was the subject “Representation Agreement”, which was entered into in California and specifically binds the parties to be governed by California law.” Hence, the rationale by the Commission would lead it to conclude that since the contract was not on its printed forms, the contract was void as to the fighting portion of the contract.  In addition, the Commission ruled that “a fighter-contract” is not valid unless both parties appear at the same time before the Commission, and the contract receives the Commission’s written approval.”  This did not happen as the contract, which was originally drafted in May 2012, was not executed until January 2013.  Regardless, it was not done before the Commission.

Even though Harvey’s “Representation Agreement” did not comply with the Commission rules, he still argued that he was entitled to “quantum meruit” (latin for “what one has earned”).  This is a theory in contract law allowing a party to be compensated for actual work/services performed.

Under this theory, Harvey was seeking to recoup losses incurred from representing Rousey.  Harvey indicated in an exhibit at arbitration that from January 1, 2010 to January 31, 2014, he collected $25,608 in income from Rousey fights, $23,180 from PPV fights and $20,830 from income of sponsorships.  This is offset by Harvey’s claim that he paid $170,376 in expenses related to Rousey’s fighting career which makes Harvey at a loss of $85,818 from representing Rousey.  The paid expenses included paying for training including strength and conditioning, sparring partners and living expenses.

However, the Commission ruled that Harvey was not entitled to quantum meruit since “such a finding would be inconsistent with the provisions of California law requiring proper fighter-manager contracts…”   The Commission reasoned in its decition, “[i]f Harvey, or other managers, were allowed to recover by means of quantum meruiti, it would undermine the statutory authority purposes of the Boxing Act.”  Thus, the Commission ruled against Harvey based on the overarching policy that it must protect the fighters from manager graft.  As stated in the decision, “[t]he Boxing Act is a regulatory statute, and recovery on a quantum meruit theory in the absence of compliance with the act would be inconsistent with its regulatory purposes.”

Payout Perspective:

As we indicated in a previous post, expect this case to heat up in the anticipated lawsuit and/or private arbitration.  However, this situation may have been avoided if Harvey and Rousey entered into a fight agreement as dictated by the rules of the CSAC.  If there would be further representation in other matters outside of fighting, it would seem that a second representation agreement would be necessary.  Based upon the facts, it looks as though the fighter-manager relationship was informal at the beginning with no need for things such as a signed contract.  This may explain the long lag between the date of the Representation Agreement (May 15, 2012) and the date Rousey actually signed it (January 29, 2013).  The harshness here is that for not following the rules of the CSAC, Harvey lost over $85,000 spent on her client that he will not be able to recoup.  The moral here is to follow the rules.

U.S. Supreme Court denies review of Mayweather copyright case

April 4, 2014

This past week, the U.S. Supreme Court denied review of a copyright infringement lawsuit from a musician that claimed that Floyd Mayweather, Jr. used a version of his song without his permission at Wrestlemania 24.

By denying musician Anthony Dash’s request for the Court to review his claims, it upholds a ruling that the musician was not able to prove he suffered monetary losses when Mayweather used a version of his song for his entrance music at Wrestlemania 24 in 2008.

The background facts of this case are interesting as Mayweather signed on to do a match at the WWE’s biggest event of the year.  It’s fairly common for celebrity guests to make appearances at this event. The contract Mayweather signed with the WWE did not include specifics on what entrance music Mayweather would use.  The WWE had communicated to Mayweather that it had selected a 50 Cent song for his entrance. But, the night before the event Mayweather’s manager told the WWE he would enter using another song and represented to the WWE that they had rights to it and granted the WWE the right to use it during his appearance.  The entrance music played for 3 minutes as Mayweather came in for his match against The Big Show.

Mayweather used the entrance music at one more WWE event.

Dash claimed that the entrance music played by Mayweather contained his copyrighted instrumental music over lyrics.  While he claimed that in 2005 he created the instrumental of the song, he did not file a federal copyright for it until 2009.

The court held that Dash could not prove actual and profit damages claims stemming from the use of his work for entrance music.  Specifically, the court was not impressed with the report produced by Dash’s expert claiming that he was entitled to $1,019,226 in actual and profit damages for the infringement at Wrestlemania alone.

(H/t: Law360.c0m)

Payout Take:  The crux of the issue centered on whether the musician could prove damages as a result of the infringement.  The report provided by his side appears overblown by just looking at the amount claimed.  I am half-joking when I write that the U.S. Supreme Court timed the issuance of this denial of review during “Wrestlemania Week.”  The underlying facts of the case are amusing considering the change in entrance music and the subsequent request for over $1 million for 3 minutes of playing a song of a relative unknown musician. With the U.S. Supreme Court finding in his favor, The Money Team gets another win.

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